Citigroup Inc. (C) stock was trading marginally higher in Monday's pre-market session after the banking giant beat first quarter earnings per share (EPS) estimates by eight cents and met revenue expectations at $18.58 billion. A 1.6% decline in year-over-year revenues and a steep downturn in equity income marred the otherwise benign confessional, keeping committed buyers on the sidelines into the opening bell.
The financial behemoth carved a strong recovery wave off December's two-year low in the upper $40s in January and stalled at resistance in the mid-$60s, generated by the 200-day exponential moving average (EMA) and fourth quarter breakdown through the second quarter low at $64.38. It mounted that barrier by a few points ahead of the news but could easily turn tail if buying power fails to pick up during the regular session.
C Long-Term Chart (1987 – 2019)
Citigroup stock broke out above 1987 resistance at a split-adjusted $26.96 in 1992, entering a historic uptrend that posted seven splits into the July 2000 high at $551.48. That marked the highest high for the next six years, ahead of a steep downturn that found support at $228.32 in July 2002. It bounced within 30 points of the prior peak in 2004 and eased into a trading range that persisted into a January 2007 breakout.
Bulls failed to support the breakout, which added less than 20 points into the all-time high at $570.00. A June rally attempt also failed, yielding a modest pullback that accelerated into a full-blown selling panic during the 2008 economic collapse. Steep downside finally ended in March 2009 after the stock undercut the 1987 low at $13.60 by 10 cents, giving way to a strong bounce that stalled in the mid-$50s in August.
That high marked resistance for the next six years as well, giving way to a secondary decline that ended in August 2011 in the mid-$20s, three months after a one-for-ten reverse split severely diluted remaining shares. It tested that level successfully in 2012 and completed a double bottom reversal, setting the stage for a strong bounce that failed near 2009 resistance in 2013. Breakout attempts in 2014 and 2015 also failed, reinforcing range resistance in the $50s.
A sell-off into early 2016 posted the third higher low off 2009's historic low, yielding a steady uptick that finally mounted resistance in December 2016. It based above new support into June 2017 and took off on a healthy advance that continued into January 2018's nine-year high at $80.70. Sellers took control through the rest of the year, carving a multi-wave correction that ended at 10-year channel support (black lines) in December.
C Short-Term Chart (2016 – 2019)
A Fibonacci grid stretched across the 2018 downtrend places the bounce into January at the 50% retracement level, while the April breakout stalled at the .618 retracement. A rally above $68 would favor continued upside into the September high at $75.24, while a decline through first quarter range support at the .386 retracement near $60 would incur technical damage, favoring continued downside that tests last year's deep low.
The on-balance volume (OBV) accumulation-distribution indicator predicts that buying power will stall badly in coming months. A long-term accumulation phase ended in May 2013, marking the first point of a red trendline that has tracked three lower highs in the past six years. A second quarter rally is likely to reach that resistance level once again, signaling an intermediate or long-term top, well before the stock completes a round trip into the 2018 high.
The Bottom Line
Citigroup stock was trading near resistance at $68 ahead of Monday's opening bell, exhibiting modest buying interest, and it needs to clear this contested level to generate more potent upside.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.